Articles Posted in Coronavirus

Coronavirus alerts for hoteliers

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27 April 2021

Click here for the latest on labor and employment guidance.

As coronavirus cases drop and economic activity starts to return to normal, the hospitality industry will soon be able to begin replacing workers who were laid off due to the pandemic. Some cities in California, and now the entire state, have enacted requirements for how hotels and other businesses can fill open positions; my partner, Travis Gemoets, has summarized the new law below.

California hospitality workers laid off during COVID-19 pandemic get rehire rights

by
Travis M. Gemoets, Partner & Senior Member of
JMBM’s Global Hospitality Group®

On Friday, April 16, 2021, Gov. Gavin Newsom put new employer obligations into law by signing Senate Bill 93, requiring hotel, event center, airport hospitality and janitorial employers to first rehire workers laid off during the pandemic when jobs become available, essentially establishing “recall rights” more commonly associated with union collective bargaining agreements. Senate Bill 93 takes effect immediately after quickly making its way through the Legislature as a budget trailer bill and will be in effect until the end of 2024. Gov. Newsom vetoed a more expansive labor-backed bill last year.

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19 February 2021

Click here for the latest articles on Hotel Finance.

The Global Hospitality Group® just hosted a very timely webinar discussing the state of the hotel and CMBS industries. Our program featured senior representatives from Argentic, Greystone, and Situs – three of the largest CMBS special servicers with the most distressed hotel debt – as well as leading data and analytics firm Trepp, HREC’s runway capital program, Manhattan Hospitality for hotel industry perspectives, and our own hospitality workouts and receivership expert to break down the current state of the distressed hotels market and CMBS special servicing.

Two of our panelists, Jack Westergom of Manhattan Hospitality Advisors and Manus Clancy of analytics firm Trepp, presented slides packed with useful information, and we wanted to make them available to those who were not able to attend the program. Jack’s update on the state of hotel industry, and Manus’ state of the CMBS industry presentation are both available for download below.

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08 January 2021

We have a new PPP Loan authorization bill out of Washington, after months of political wrangling. Congress could have done more, but they did provide for up to $2,000,000 in additional forgivable loans per borrower, along with provisions which specifically cater to the hospitality industry.

As Jay Thompson and other members of our Corporate team write below, Congress has made obtaining a PPP loan and getting forgiveness for that loan easier. They have also expanded the definition of what can be an “eligible expense” upon which to base a PPP loan, and they have allowed for the issuance of a PPP Loan to a borrower in bankruptcy as part of a restructure of the borrower’s business. The Small Business Administration wasted no time in starting to issue interim rules interpreting the new law, and we will probably see one or two more before they produce a working application form.

COVID Relief Bill: Changes to the Paycheck Protection Program and New Lending Terms

by
Jay Thompson, Vanessa Han and Marianne Martin

On December 27, 2020, the President signed the Consolidated Appropriations Act, 2021 (“2021 Act”), which contains the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (“Economic Aid Act”). The acts contain changes to the Paycheck Protection Program (“PPP”) that are intended to limit assistance to small businesses that need the financial support. The following highlights the impact of the 2021 Act and the Economic Aid Act on PPP loans.

Tax Treatment of the Paycheck Protection Program Loans

The 2021 Act provides for special tax treatment in Division N, Section 276 for forgiveness of loans granted pursuant to the original Paycheck Protection Program under the CARES Act (“Existing PPP Loans”) and any new PPP loans (“New PPP Loans”) under the Economic Aid Act.

The Economic Aid Act provides that any loan forgiveness under either the Existing PPP Loan Program or the New PPP Loan Program (collectively, the “PPP Program Loans”) shall not be treated as gross income to the recipient for tax purposes or the recipient’s partners or shareholders. Further, all costs that were considered in calculating a PPP loan (salaries, rent and utilities) are still eligible to be used as deductions against gross income of a PPP loan applicant even if it receives loan forgiveness. The IRS had previously issued a ruling that the costs could not be considered as offsets to income if loan forgiveness had been granted to the taxpayer and those costs were used to calculate the Existing PPP Loan.

Specifically, the PPP Program Loans are subject to the following tax treatment:

  • No amount shall be included in the gross income of a recipient by reason of forgiveness of a PPP Program Loan.
  • No deduction shall be denied, no tax attribute shall be reduced and no basis increase shall be denied as the result of the exclusion of the forgiveness amount under a PPP Program Loan from the recipient’s gross income.
  • Neither the partners in a partnership nor the shareholders of an S corporation shall have to recognize any gross income by reason of forgiveness of a PPP Program Loan.
  • The partners in a partnership and the shareholders of an S corporation shall be entitled to their distributive share of any costs giving rise to forgiveness under either of the PPP Program Loans.

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